You Say Hello, I Say Goodbye!

You Say Hello, I Say Goodbye!                                                   14 October 2022                    

The 2,338 real estate and properties transactions totalled US$ 1.99 billion, during the week ending 14 October 2022. The sum of transactions was 106 plots, sold for US$ 480 million, and 1,791 apartments and villas, selling for US$ 1.04 billion. The top two land transactions were both for land in Palm Jumeirah, sold for US$ 163 million and US$ 59 million, followed by a third in Al Satwa fetching US$ 12 million. Hadaeq Sheikh Mohammed Bin Rashid recorded the most transactions, with twenty-two sales, worth US$ 122 million, followed by Jabal Ali First with nine sales transactions, worth US$ 7 million, and Al Hebiah Fifth, with nine sales transactions, valued at US$ 6 million. The mortgaged properties for the week reached US$ 401 million, with the highest being for land in Island 2, valued at US$ 74 million, while 157 properties were granted between first-degree relatives worth US$ 114 million.

September property deals jumped 33.4% to 7.3k transactions, year on year, and topped 62.4k in the twelve months to 30 September – its highest level since 2009. CBRE posted that off-plan market sales increased by 51.4%, while the secondary property market transactions rose by 17.3%, compared to the same period last year. September average prices for residential properties have risen by 8.9% in the past twelve months, with average apartment prices rising by 8.0% to US$ 309 per sq ft and villas by more than 14%, to US$ 368. As with other recent reports, the consultancy noted that prices are “still below the highs witnessed in late 2014”, with apartments remaining 23.8% and villas staying 21.6% below that peak. On the year, it was estimated that apartment and villa rents jumped 26.6% and 25.5%. Many expect a further spike in Q4, as the market will be boosted by the knock-on impact of the FIFA World Cup, starting next month in Qatar.

A UBS Global Wealth Management report indicates that Dubai’s real estate bubble risk is the second lowest after Warsaw. Its Global Real Estate Bubble Index noted that, despite recent hikes, the Dubai housing market is still only at its 2019 price level, and still 25% below its 2014 peak, and is now in fair-valued territory. It confirmed that among the world’s twenty-five major cities, the average nominal house price growth was 10.0%, in the twelve months to mid-2022, and that there were indicators the global housing boom was coming to an end. It noted that Dubai’s house price growth is likely to remain high in the coming quarters, but growth rates will gradually recede amid higher financing costs. The study also reported that “looking ahead, Dubai’s property market is likely to benefit from a new visa program – with looser residence requirements for skilled professionals – and new regulations increasing transparency of transactions. Dubai is already attracting more skilled and wealthy migrants from other regions, where the investment climate has become less favourable. This population inflow has impacted both the prime owner-occupied and the rental markets. Rents bottomed out last year and have climbed by 22% since mid-2021. As these new tenants settle in, they will eventually become potential buyers.”

Only last month, Alpago Properties was in the news for selling Dubai’s most expensive villa at US$ 82 million, located on Palm Jumeirah. Now it has tied up with Foster & Partners to develop the Palm Flower on the West Beach of Palm Jumeirah. The new ultra-luxury property project will only have ten residential units on eleven floors, with each occupying an entire floor and one mega penthouse taking up two floors. Each unit will have floor-to-ceiling windows, with unobstructed views of the Arabian Gulf, and will also house high-end amenities such as a private cinema, a private pool facing the sea, a garden terrace and a gymnasium. The lobby will link the basement with personalised parking pods, through private elevators, that open directly into each apartment. Prices and other details will be announced later.

Damac Properties unveiled its latest foray in the emirate’s property market – the 41-storey luxury Chic Tower, featuring interiors designed by Swiss jeweller de Grisogon. Located in Business Bay, it will initially include studio, 1B/R and 2 B/R units, with plans to add 3 B/R and 4 B/R apartments, with “hydroponic walls and sky pools” at a later stage. No other details, including costs and construction timetable, were made available, except that it will include many amenities including seven baths, a beauty bar and sky gyms.

There are reports that a US$ 5.0 billion Moon Resort could debut in Dubai, as the US developer, founded by Michael Henderson and Sandra Matthews, is considering several global sites for its introduction. It is estimated that the resort, with an overall height of 224 mt, could be built within forty-eight months. The developers are planning a global roadshow next year to select four locations but will limit each region to just one project. They estimate that The Moon resort could become the most profitable tourism project ever – but there again any developer would paint such a rosy picture.

The world’s largest group of independent hotel brands, Global Hotel Alliance, posted a 68% hike in room revenue in the first nine months of 2022, as well as reaching 84% of pre-pandemic levels. The firm, with its twenty-two million members of its GHA Discovery loyalty programme, saw total revenue at US$ 900 million, assisted by a 20% rise in average length of stay. It noted that the UAE, the Maldives and Thailand were the top three countries driving growth in the period, with the most-visited cities for GHA Discovery members being Dubai – with a 48% growth in stays – followed by Singapore and Bangkok. The highest-spending international travellers came from the US (US$ 76million), the UK (US$ 71 million) and Germany (US$ 60 million).

Monday saw the opening of the 42nd edition of the five-day GITEX GLOBAL by Sheikh Maktoum bin Mohammed bin Rashid. Taking place in its usual location of the Dubai World Trade Centre, it was the biggest in the event’s history., with 100k attendees, 5k leading technology companies from more than ninety countries across twenty-six sold-out halls. There were thirty-five Unicorns hoping to expand in one of the world’s fastest-growing markets. 250 government entities were also present to showcase their latest public-private partnerships and digital projects. The Deputy Ruler of Dubai commented that “the record global participation in the 42nd edition of the event reflects Dubai’s profile as a hub for innovation, knowledge sharing, enterprise and networking in the international technology industry”.

At the event, DAFZA entered the metaverse, offering an innovative experience for customers. METADAFZ will enable clients from across the globe to conduct meetings via a virtual platform, offering a different option to the “old” way of conducting business and bridging the gap between the physical and virtual world.

Affirming the emirate’s position as a major global hub, non-oil trade at Dubai Airport Free Zone rose 36.1% year-on-year in 2021, with figures exceeding US$ 41.4 billion. The chairman of the Dubai Integrated Economic Zones, HH Sheikh Ahmed bin Saeed Al Maktoum, noted that “we are proud of these exceptional results that highlight the strategic contribution of DAFZ under the umbrella of DIEZ. These results have been pivotal in promoting economic recovery in Dubai and the UAE”. The free zone contributed 10.7% to Dubai’s non-oil trade in 2021 and posted a US$ 2.53 billion trade surplus.  Of that total, imports hit record levels and jumped 48% on the year, whilst exports more than quadrupled to US$ 381 million. The two main drivers behind the improved growth were machinery/equipment/appliances and precious stones/metals/jewellery’ sectors, with growth levels 36% and 46% higher, as well as making up 94% of DAFZ’s overall trade. Location-wise, Asia accounted for 43% of total trade, valued at US$ 18.9 billion, followed by the Mena – 37%, at US$ 16.5 billion, and Europe’s 13%, with a value of US$ 5.9 billion.

By 2031, the UAE aims to make the country a global industrial centre, and with this in mind, it has launched a national programme to boost the pace of the technological transformation, as it plans to develop 1k tech projects over the next nine years. The strategy includes the establishment of national centres for industrial empowerment and plans to export US$ 4.1 billion worth of advanced Emirati technological products a year. Earlier in the year, ‘Operation 300 bn’ was launched highlighting the need to increase the industrial sector’s contribution to the country’s GDP to US$ 81.7 billion, (AED 300 billion), by 2031, from US$ 36.2 billion in 2021. The key components include innovation and the adoption of advanced technologies in the industrial sector, with the federal government updating and facilitating legislation, including the introduction of 100% foreign ownership of projects and making dedicated financing available. Focussing on eleven sectors – petrochemicals, plastics, metals, food, agriculture, water, health care, space, biotech, medi-tech, pharmaceuticals, clean and renewable energy, including hydrogen production, machinery and equipment, rubber and plastic and electronics and electrical gadgets – it aims to improve UAE’s global standing on the Competitive Industrial Performance Index, by ten rankings, to 25th place globally; over the period, there will be direct government support for at least 13.5k SMEs.

HH Sheikh Mohammed bin Rashid chaired a cabinet meeting on Monday to approve UAE’s US$ 68.7 billion federal budget for 2023 – 2026, with revenue estimated to come in at US$ 69.7 billion.   It is estimated that revenues will grow at a quicker rate than expenditure next year – 11.0% to 3.9%. A further analysis sees the main expenditure drivers being social development/benefits, equating to 39.3% of the total 2023 spend, followed by government affairs, (38.0%), infrastructure/economic resources (3.8%) and the financial assets and investments, (3.4%); other federal expenses account for the balance of 15.5%. The Dubai Ruler, and the country’s Prime Minister, commented that “the budget of the union is sustainable and balanced, and it is a major driver of the union government and its development ambitions for the people of the union.”

The owners of GEMS Education are considering offering an IPO, which could raise up to US$ 6.0 billion, as a potential option for sale, but to date there is still no confirmation from either of the two shareholders – CVC Capital or Sunny Varkey, the school operator’s founder. Prior to 2019, when CVC acquired a stake, it was solely owned by the Varkey family. One of the world’s largest operators of private schools, with a student body of over 130k, it started in Dubai over sixty years ago and now operates more than sixty schools across the Mena, along with educational institutes in Asia, Europe and North America.

At its first general assembly since it joined the DFM, shareholders of Dubai Electricity and Water Authority have approved the items at the Company’s first general assembly agenda, attended by 90.19% of the shareholders. Among the agenda items approved were the H1 cash dividend distribution of US$ 845 million, equating to US$ 0.0169 per share, and the Board recommendation to suspend any further allocation of profit towards legal reserve, considering the Company’s legal reserve is currently in excess of 50% of its paid-up share capital.

The DFM opened on Monday, 10 October, 34 points (1.0%) higher on the previous week, and nudged up 4 points  on Friday 14 October, to close on 3,377. Emaar Properties, US$ up 0.05 the previous week, gained US$ 0.03 to close the week on US$ 1.66. Dewa, Emirates NBD, DIB and DFM started the previous week on US$ 0.69, US$ 3.60, US$ 1.63, and US$ 0.39 and closed on US$ 0.69, US$ 3.53, US$ 1.64 and US$ 0.39. On 14 October, trading was at 181 million shares, with a value of US$ 120 million, compared to 105 million shares, with a value of US$ 66 million, on 07 October 2022.  

By Friday 14 October 2022, Brent, US$ 8.89 (9.2%) higher the previous week, shed US$ 1.59 (1.7%) to close on US$ 91.63.  Gold, US$ 50 (3.1%) higher the previous fortnight, lost US$ 18 (1.1%), to close Friday 14 October, on US$ 1,650.

Opec has lowered its global oil demand forecast for 2022, down 500k bpd to 2.6 million barrels, and by 400k bpd to 2.3 million barrels in 2023 and attributing this move to Covid-19 restrictions in China, economic challenges in Europe and continuing global inflationary pressures. OECD countries will see this year’s oil demand down 200k bpd to 1.4 million barrels. Demand for Opec crude will decline by 200k bpd to 28.7 million barrels, and by a further 300k bpd next year.

Late last week, Toyota issued an apology to 300kk customers after revealing that their email addresses, and customer management numbers, had been “mistakenly” leaked through a subcontractor. It had noted that customers, who had registered their email addresses on the Toyota Connect (T-Connect) app since July 2017, were affected, with the app connecting customers to their vehicles through smartphones. It stressed that other information, such as names, phone numbers and credit card details, was not affected. The world’s largest car maker joins a string of high-profile companies – including Cisco, Samsung, LinkedIn, Facebook and Twitter – that have had their data and customer information compromised.

On Monday, Air France and Airbus went on trial in Paris on charges of involuntary manslaughter relating to the 2009 AF447 Rio to Paris crash that killed all 228 on board. The plane plunged into the Atlantic Ocean, after it stalled entering a zone of strong turbulence, and it took nearly two years to locate the bulk of the fuselage and recover the “black box” flight recorders. The case evolves around alleged insufficient pilot training and a defective speed monitoring probe, with the initial enquiry concluding the crash resulted from mistakes made by pilots disorientated by so-called Pitot speed-monitoring tubes that had frozen over in thick cloud. Both plaintiffs denied any criminal negligence, with the case dropped in 2019, attributing the crash mainly to pilot error. Exasperated by the decision, victims’ families went to court and in 2021, a Paris appeals court ruled there was sufficient evidence to allow a trial to go ahead. Air France commented that it “will continue to demonstrate that it did not commit any criminal negligence that caused this accident, and will request an acquittal,” whist the French plane maker refused to comment. Testimony will also be heard from some of the victims’ family members, 476 of whom are civil plaintiffs in the case. However, the maximum fine is set at a paltry US$ 220k, and even if there is a conviction, who will face punishment – the plane maker, the carrier or individual senior management?

The Royal Mail has announced plans to cut 7.2% (10k) jobs, from its current workforce of 140k, by next August, blaming ongoing strike action and rising losses at the business – it expects this year’s losses to top US$ 390 million. It anticipates that 6k jobs will be from redundancies and the balance from natural attrition. Other drivers for the continued losses include the fallout from the recent eight-day strike and a marked reduction in the volume of parcels being posted. A fresh round of strikes, over pay and conditions, will encompass nineteen days of industrial action, including Black Friday. During H1, Royal Mail said that strike action cost the business US$ 78 million, leading to an operating loss of US$ 245 million, compared to a US$ 263 million profit a year earlier. International Distributions Services, the parent company of Royal Mail, saw its share price slump 11% to US$ 2.09 on Friday following the announcement.

Having announced previous plans to axe 110 main stores, as part of a major overhaul, Marks & Spencer has decided to speed up the process, with sixty-seven of its bigger – “and lower productivity, full line stores” – to shut within five years, whilst at the same time opening 104 new Simply Food stores. Its aim is to have 180 “full-line” shops selling food, clothing and homeware products by early 2028, down from its current 247. No details were given on which locations, or how many jobs, would be affected by the plans.

Morgan Stanley announced disappointing Q3 results with all indicators heading south – net income down 30.0% to US$ 2.6 billion, revenue sliding 12% lower to US$ 12.9 billion, and investment banking tanking 55% to US$ 1.28 billion, along with declines across the bank’s advisory, equity and fixed income segments. The market expressed its disappointment by knocking nearly 4% off its share value to US$ 76.21 in early Friday afternoon trading and has lost over 25% of its market cap over the preceding twelve months. It is almost certain that there will be job cuts announced over the next six months.

Almost 4% of Apple Inc’s 4k employees in Australia are due to go out on a one-hour strike on 18 October because of lack of progress on wage negotiations – it will be the company’s first such action in Australia and follows recent moves to increase unionisation in the US. The main impact will be felt in the tech company’s store operations but will also exacerbate the industrial relations problems it is facing elsewhere. The strikers are members of the Retail and Fast Food Workers Union and their action will restrict most customer services in at least three of the company’s twenty-two stores in the country. Two months ago, Apple had proposed a new set of locked-in wage rises and conditions, following which three unions, including RAFFWU, successfully appealed to the industrial arbiter for more time to negotiate with Apple. The three unions had wanted the tech giant to guarantee wage increases that reflect inflation and weekends of two consecutive days rather than being split, with Apple responding that its minimum pay rates are 17% above the industry minimum and that full-time workers get guaranteed weekends. The strike action is because the union has “come to the end of that today and we still aren’t anywhere near a satisfactory agreement, so last night members unanimously endorsed that path.” This can only be the beginning of unionisation in Australia becoming the norm for employees in tech giants such as Apple.

The AFP has arrested two Australian men, aged 67 and 71, and charged them with bribing Sri Lankan officials to secure two infrastructure contracts, worth over US$ 10 million, between 2009 – 2016. The charges follow a decade-long investigation into SMEC International Pty Ltd, an Australian-based engineering firm, which involved authorities from the US, Canada, India and other jurisdictions. It is alleged that bribes, worth US$ 200k, were paid to government officials. Founded in 1949, and known as the Snowy Mountains Engineering Corporation, four of the company’s subsidiaries in India, Bangladesh and Sri Lanka were temporarily barred, in 2017, by the World Bank, from bidding for any of its contracts.

In a bid to achieve its net-zero carbon goal by 2040, Amazon has announced investment plans of US$ 975 million in electric vans, trucks and low-emission package hubs across Europe. It also noted that the investment would help its electric van fleet in Europe more than triple from 3k vehicles to over 10k by 2025 and hoped that the investment would also spur innovation across the transportation industry and encourage more public charging infrastructure for electric vehicles. To date, its largest electric van order is for 100k vehicles from Rivian Automotive Inc and it will also invest in doubling its European network of “micro-mobility” hubs from more than its current twenty cities.

New rules introduced by the Biden administration will try to ensure that US firms do not sell certain chips used for supercomputing and artificial intelligence to Chinese companies. In the past, the US targeted specific companies, such as Huawei, barring sales of technology on national security grounds, but the latest measures are less circumspect. Many of the measures are aimed at preventing foreign firms from selling advanced semiconductors to China or providing China with the tools to make advanced chips. Some investors are concerned that the rules should be implemented in a more targeted way, warning that they may cost the industry millions of dollars in revenue; Nvidia noted that they could cut US$ 400 million from their revenue stream. The Semiconductor Industry Association has called for increased international collaboration to “help level the playing field”, at a time when the US industry pours billions of dollars into its domestic chip industry, so to boost US competitiveness. Shares in major Asian computer chipmakers slumped after the US announcement, with the likes of Taiwanese chipmaker TSMC, South Korea’s Samsung Electronics, Tokyo Electron and China’s SMIC falling by 7.7%, 2.3%, 5.5% and 1.7% respectively in Tuesday’s trading.

Mainly because of the global economic slowdown, Samsung has warned the market that it faces a 32% slump in profits to US$ 7.6 billion, as demand for electronic devices, and the memory chips that power them, shrinks due to the global economic slowdown; its quarterly revenue is expected to be US$ 1.0 billion short of latest forecasts. The South Korean company was not the only one, with the US chip maker Advanced Micro Devices also confirming  a fall in demand for computers, as potential buyers cut back on purchases, with the cost-of-living rising; its shares fell 4.5% on the news. With sales of electronics tanking for various reasons, including surging inflation, mounting interest rates and the “Ukraine impact”, it has resulted in those companies that buy memory chips, having to cut their purchases as they use up their existing inventory. It is almost certain that the industry will continue to deal with falling demand that will see them posting lower revenue, lower profits and lower margins in the coming months.

To meet demand over this year’s Christmas holiday season, Amazon is to hire 150k employees throughout the US, with vacancies ranging from packing and picking, to sorting and shipping. On average, it is expected that those selected can earn, on average, US$ 19 or more per hour based on their location and role. This announcement comes at a time when the country continues to have a tight labour market which is one of the main reasons for the higher cost of goods.

Meanwhile, US jobs growth slowed for a second month in September, adding 263k new jobs – the fewest since April 2021 – and maybe an indicator that the labour market is beginning to cool. Despite this, analysts are predicting the need for further rate hikes to slow the economy, still beset by raging inflation. Any economic downturn will inevitably lead to some job losses, as a trade-off for reducing demand on big ticket items that should bring prices downwards and possibly avoid a recession. Restaurants, bars and health care firms led the September job gains, as the month’s unemployment rate fell 0.2% to 3.5% from 3.7% in August – a fifty-year low. On the year, the average hourly wage was 5% higher than a year earlier. There are signs that job losses are on the increase, especially in sectors such as the housing and tech sectors, whilst Peloton has announced its fourth round of job cuts this year, shedding another 500 positions, equating to 12% of its workforce.

Latest figures show that September US consumer prices rose more than expected – a sure indicator that the Fed is not yet winning the inflation fight, as it dropped just 0.1%, on the month, to 8.2%. The rate is well above the central bank’s 2% target and means the Federal Reserve is likely to continue to keep raising interest rates in an attempt to cool rising prices. America’s central bank has been aggressively raising its interest rates, to cool inflation, which has made the dollar more attractive to investors, but at the same time pushing up the value of the greenback. Although inflation has dipped from its June zenith of 9.1%, attributable to a marked decline in petrol prices, clothing costs and used car prices, grocery prices – 13% higher on the year – housing and medical costs have risen sharply; excluding food and energy, inflation jumped 6.6% – the fastest rate since 1982. Despite raising rates five times since March, including the last three being all being at 0.75%, inflation still seems far away from  disappearing  from the economic landscape, with these increases having had the negative effects of disrupting the global markets, slowing sectors such as housing and pushing up costs across the board. With the mid-term elections next month, Joe Biden must be hoping that the Fed actions will not slow economic activity by much so as to push the world’s leading economy into recession.

With news that prices in the US consumer prices had risen faster than anticipated, the Japanese yen touched a 32-year low against the US dollar, falling to 147.66, with its Finance Minister Shunichi Suzuki confirming that the government will take “appropriate action” against the currency’s volatility. Only last month, the government surprised the market by injecting more than US$ 20.0 billion to prop up the ailing currency – the first time that Japanese authorities had intervened in the currency market since 1998. But such action will have little impact on the global stage as long as the government maintains rates much lower than those of the Fed.

Whilst it appears that Liz Truss is out of her depth, the ECB President Christine Lagarde seems to be in cuckoo land saying that the bloc is still growing and that “Europe is not in recession”, with the aside that “we never had such a positive employment situation.” Latest surveys seem to point that the euro zone will contract both in Q4 and Q1 2023. This week, the German government indicated that the country’s energy crisis will probably push the economy into a 0.4% recession early next year – only for the third time since the GFC. It seems likely that the central bank will add a further 0.75% to rates at their next meeting at the end of October.

The United Nations Development Programme has called for a speedy response, as it has warned that fifty-four developing nations are spiralling into a deepening debt abyss. Many of the countries face converging economic pressures and may find it impossible to access new financing with such countries “among the most climate-vulnerable in the world”, and that they “desperately needed investments in climate adaptation and mitigation will not happen”. Forty-six of these countries had a cumulative US$ 782 billion debt pile in 2020, with Argentina, Ukraine and Venezuela accounting for more than a third of that amount. It also noted that a third have debt labelled as being “substantial risk, extremely speculative or default”, and that Sri Lanka, Pakistan, Tunisia, Chad and Zambia, are the five countries at the most immediate risk. The situation has worsened because a freeze on debt repayment, during the pandemic to lighten their burden, has expired. There is no doubt that a major restructuring plan is long overdue and until then the situation will continue to deteriorate – in 2022, ten more countries have now been effectively shut out of the lending market, more than doubling to nineteen developing countries., with UNDP noting that “the risks of inaction are dire”.  

In the UK, the number of people neither working nor looking for work had continued to rise over the past few months, as the jobless rate touched 3.5% by the end of August, at the same time, that the number of job vacancies dipped again, although the level still remains high with many firms struggling to recruit. The decline in the number looking for work has sent the unemployment rate to its lowest for nearly 50 years but despite this, the pressure on pay remains, as most recent pay increases fall way behind the surging inflation rate. The economic inactivity rate – which measures the proportion of people aged between 16 and 64 not looking for work – increased to 21.7% in the June to August quarter.. There are a record high of almost 2.5 million people, considered inactive number because they are long-term sick, whilst the economic inactivity rate sees that 21.7% of the people aged between 16 and 64 are not looking for work. The number of those inactive because they are long-term sick hit a record high of nearly 2.5 million.

The Institute for Fiscal Studies has estimated that the Truss government may have to lay off 200k civil servants to avoid adding billions of pounds to the national debt. For example, the public debt will be increased by US$ 5.6 billion just to cover the budgeted 5% pay rises this year.  The former Chancellor Kwasi Kwarteng was tasked with the job of keeping public finances under control including finding ways of financing the US$ 52 billion tax cuts announced at the beginning of his reign last month. He was expected to make his plan public on 23 November, but many expect that this may be brought forward by his successor, Jeremy Hunt. The IFS said about 100k job cuts this year would ensure the overall wage bill was unchanged and avoid cuts elsewhere in departments. If pay increases with inflation in 2023, the government would need to cut another 100k jobs to keep the bill in check.

The Bank of England came up with two announcements this week – the first that it would increase the amount of bonds it can buy in the final week of the scheme, which ended today and that it would introduce new measures so as to ensure an “orderly end” to its emergency bond buying scheme; this was introduced, after last month’s mini-budget, that pledged US$ 52 billion of tax cuts, as part of a plan to boost economic growth, to stop a collapse of some pension funds. The BoE confirmed that the measures are “designed to reassure pension managers – and pension holders – that help will be provided”, and that it would tighten monetary policy as it fights inflation. As a consequence of the BoE’s statements, the pound hit a record low and investors demanded a much higher return for investing in government bonds, causing some to drop sharply in value. Last month, the Truss government had to thank the Bank of England for its timely intervention in buying gilts, after the market showed its disdain for the then Chancellor all out to spend money, with no plan on how the US$ 64 billion of tax cuts would be bankrolled. There was an immediate collapse in the price of gilts, after his mini budget resulted in a rush to sell bonds, forcing their price to tank, in some cases by 50%. If the BoE had not intervened the possibility was that those pension funds could have got to a position where they could not pay their debts.

Chaos ruled the markets all week, with the BoE commenting that the government’s unplanned and unthought out economic strategy was likely to put households under severe pressure next year. It estimated that the number having to spend 70% or more of their disposable income on mortgage rates and essentials would reach its highest level since pre GFC. The government seemed to forget that the BoE’s double bail out efforts, over the past two weeks, were a temporary and targeted effort aimed at maintaining some sort of financial stability. There was no doubt that the government had to go back, change tack and return quickly to the market, with an economically credible and politically viable debt plan, including a set of tax and spending budgets, with independent forecasts. What the dynamic duo have done to date would not even warrant a pass in an Economics 101 examination, with a former IMF deputy director noting that the UK economy was on “shaky ground”.

By the end of her first six weeks in power, “Dizzy Lizzy” had fired her Chancellor of the Exchequer – and close ally – Kwasi Kwarteng and scrapped some of her more radical and unpopular economic measures to placate her growing number of opponents in the Tory hierarchy and to ensure her political survival as Prime Minister, for the time being; she also cancelled the rise in corporation tax from 19% to 25% from next April. She accepted that her plans for unfunded tax cuts had gone “further and faster” than investors were expecting. Despite yet another U-turn, both sterling weakened, and gilt prices tumbled, as the analysts opined that her reversal of US$ 22 billion of tax cuts was insufficient to restore some sort of tranquillity in the volatile market. There are still unfunded tax cuts of US$ 27 billion to be accounted for. On Friday, Jeremy Hunt, (a supporter of Rishi Sunak), became the fourth Chancellor in four months following in the steps of Kwarteng, (who lasted 38 days), Nadhim Zahawi, (63 days) and Sunak. The lady leader must have got used to singing You Say Hello, I Say Goodbye!

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